Hostplus expands venture capital commitment
Hostplus has announced a $85 million commitment to Artesian’s seed and later stage Australian VC funds, and will partner on investments in China.
Artesian has cemented its place as Australia’s leading seed stage venture capital (VC) firm, announcing a $85 million investment from industry superannuation fund Hostplus for investments into Australian high-growth ventures. The Hostplus investment brings funds under management across Artesian’s VC platform to more than $150 million.
Artesian employs a unique, scalable approach to early stage VC, a platform model which provides a pre-screened funnel from which it subsequently makes concentrated later stage investments.
In the past five years, the Australian startup ecosystem has seen an explosion of activity at seed, angel and early stage venture capital. Accelerators, incubators, university programs, angel groups, and more recently equity crowdfunding platforms, have multiplied as the number of startups being formed has proliferated.
"There are now more than 10,000 startups being formed in Australia over a five-year period. The challenge for VCs, corporate investors and acquirers, and other later stage institutional investors is that 90 per cent of the 10,000 startups being formed are uninvestable and to be avoided. It is difficult for traditional VCs and other late stage investors to scale their normal deep-dive due diligence processes across so many ventures at this early stage”.
Artesian addresses this scaling issue by partnering with best of breed accelerators, incubators, university programs and angel groups. Artesian’s partners include Sydney Angels, BlueChilli, iAccelerate (UoW), Slingshot, ilab (UoQ), SproutX and Energylab.
Artesian’s partners pre-screen over 2,000 startups each year, selecting the top 5–10 per cent to participate in their accelerator programs. Artesian has the right to invest in every pre-screened startup and pro rata rights for subsequent rounds. The fund follows-on in startups that successfully raise further rounds from external angel, corporate or VC investors. The portfolio continues to invest in the best 25–50 startups with material traction heading for trade sale or IPO exits. Artesian’s Australian VC portfolio includes almost 100 investments including later stage ventures such as Fame & Partners, Swift, HeyYou, Instaclustr, Clarity Pharmaceuticals, CriticalArc, ingogo, Jayride and Gamurs.
Hostplus’s $85 million investment into the Artesian funds brings the industry super fund’s investments into Australian VCs to over $350 million including commitments to M.H. Carnegie & Co., Brandon Capital, Blackbird Ventures and Square Peg Capital.
“Hostplus has almost single-handedly reinvigorated institutional support for Australian startups and entrepreneurs. Without the vision and commitment of CEO David Elia, CIO Sam Sicilia, the investment management team and the Board of Hostplus, high growth Australian ventures might struggle to build traction, create new products, jobs, have material exits and go on to motivate, support and inspire a new and even larger number of innovative, risk-taking founders."
"There is no doubt that technology has shaped our society and is pervasive in our everyday lives. In fact, technology companies have become the most valuable companies in the world. We believe it makes sense to further diversify our portfolio into VC's and foster greater innovation for Australia."
As well as its active role investing in Australian seed and late stage ventures, Artesian has been investing its Partners’ capital in startups in China since 2009. In addition to the $85 million commitment to Australian ventures, Artesian will partner with Hostplus in identifying and investing in remarkable startups in China. Artesian’s Managing Partner Felix Zhang, who has been running the Shanghai office with two analysts since 2008, will be responsible for these investments. Artesian’s current China-based startup investments include Dr Panda, italki, Tradesparq, Rechaos and Aidaijia.